Edward H. Gomez, Chief Financial Officer, had the following comments on the Bank's performance: "Our nine-month earnings have now surpassed last year's record full-year results. On a year-to-date basis, net income is up by 45% from the same period in fiscal 1999. Fee based revenues grew by 23%, led by sustained strength in Global Fund Services and, on the Private Clients side, the success of our flagship All Points Multi-Manager investment vehicle. Interest earnings were also up, reflecting volume and margin improvements across all geographical regions."
Mr. Gomez added: "Our growth in revenue has been achieved against the backdrop of carefully managed costs as our efforts to achieve operating efficiencies continue to bear fruit. The Bank's worldwide efficiency ratio has improved by a full five percentage points compared with the same period last year. This quarter's performance helped boost our trailing twelve-months return on equity to 18.6%, versus the year ago level of 15.7%."
Henry B. Smith, President and Chief Executive Officer, added: "We are extremely pleased by this excellent performance, spanning all of our businesses and global network. Looking forward, we see exciting opportunities for all of our key businesses and believe that the heightened focus provided by our new strategic plan will help to direct us towards ongoing success."
Financial Results
Third Quarter 1999/2000 Compared to Third Quarter 1998/99
Total revenue grew 20% to $113.1 million, from $94.3 million in the third quarter of last year, as a result of improved interest earnings and strong fee revenue growth across all business lines. Net interest earnings increased 36% to $49.8 million, while fee-based revenues rose to $64.6 million, a 30% improvement.
Fees earned by Global Fund Services (GFS) increased 25% to $26.3 million versus $21.1 million in the same quarter last year with over half of the year to year improvement reported in the Far East where we benefited from sustained improvement in financial markets. Our offices in Europe and the Americas also reported significant increases, assisted by substantial new fund launch activity.
Private Trust fees grew modestly relative to the Bank's other business sectors, rising 10% to $7.7 million for the current quarter with increases in the Americas and Far East partly offset by a decline in some European offices.
Fees from investment services roared ahead of last year, increasing 82% to $13.7 million driven by the growth of the All Points Multi-Manager investment vehicle and strong results from equity execution services in the quarter, with March being one of the strongest months on record. The success of the All Points Multi-Manager investment vehicle has resulted in both increased fund asset values and higher margins.
Foreign exchange earnings increased to $10.8 million from $8.7 million in the third quarter of last year. All of our geographic regions enjoyed a bounce back in both trading volumes and spreads after a dampening of market activity in the run-up to Year 2000.
Compared with the third quarter of fiscal 1999, banking services fee income increased 16% to $6.1 million from $5.2 million. More than half of this growth was attributable to an increase in commitment fees for corporate loans in Bermuda's credit portfolio.
Net interest income grew to $49.8 million for the current quarter, an increase of 36% from $36.6 million reported a year ago, driven by higher volumes, improved deposit mix and enhanced asset yields, largely in Bermuda and the Far East.
Investment and other income fell sharply to a loss of $1.4 million versus a gain of $7.8 million during the same quarter last year when the Bank enjoyed some significant non-recurring investment gains. The current quarter loss was generated by a decline in the mark to market value of the trading portfolio for the quarter.
Operating expenses were $79.2 million, up 12% from the same period a year ago. Increases in corporate, marketing, salaries, systems and communications expenses were slightly offset by declines in pension and staff benefit expenses, as well as property expenses. The Bank's headcount rose by 30 staff compared to last year, totaling 2,649 employees world wide as at 30 March 2000.
Balance Sheet
Total balance sheet assets were $10.6 billion at 31 March 2000, the increase of $1 billion from a year earlier driven principally by the investment of higher demand deposit liabilities in Bermuda and the Far East. The increase in total assets was mostly placed in high quality marketable securities, which rose nearly $700 million to $4 billion year on year. The remaining increase was shared between cash and deposits with banks (up $120 million), loans (up $144 million) and other assets (up $45 million due to higher unsettled trade volumes in stock-broking subsidiaries).
On the liability side, customer deposits increased to $9.7 billion from $8.9 billion, with the 10% increase generated by higher demand deposit balances as term accounts fell slightly year to year (down $86 million).
Total shareholders' equity rose 28% to $607 million from $473 million a year ago, largely reflecting the retention of earnings but also impacted by additional capital generated through exercise of the Bank's Millennium warrants.
Notes to Editors
The Bank's results are stated in accordance with generally accepted accounting principles in the United States.
Forward Looking Statements
This media release may be deemed to include forward looking statements, such as statements that refer to business plans, financial goals, business prospects and similar matters, that indicate our beliefs and expectations for future performance. Such forward looking statements involve certain risks and uncertainties including worldwide economic conditions, success in business retention and obtaining new business and other factors. These, and other, risks and uncertainties could cause actual results to differ materially from those indicated by forward-looking statements. Bank of Bermuda's 1999 Annual Report includes additional information about factors that could affect actual results in the section entitled "Forward Looking Statements".
Bank of Bermuda is an international financial institution that provides banking, trust, asset management, fund administration and global custody services, as well as credit card transaction processing for e-commerce to its corporate, private and retail clients. Founded in 1889, its global headquarters are in Bermuda, and it has offices or subsidiaries in the Cayman Islands, Cook Islands, Dublin, Guernsey, Hong Kong, Isle of Man, Jersey, London, Luxembourg, New York, New Zealand, and Singapore. It has a representative office in Bahrain.
The Bank is a publicly-traded corporation, listed on the Bermuda Stock Exchange. Bank of Bermuda has in excess of $80 billion in assets under administration.
Further information on Bank of Bermuda is located on the Internet at www.bankofbermuda.com.
Media / Analyst Contact:
Alison J. Satasi
Vice President, Investor Relations
Bank of Bermuda
Telephone: (441) 299-6648
Facsimile: (441) 299-6544
E-mail: Investor_Relations@BankofBermuda.com